Accessing your super during COVID-19

For battling with the economic fallout due to COVID-19, the Australian government has allowed early to access super:

Temporary residents are able to access up to $10,000 of their superannuation

Australian residents can access up to $10,000 in 2019-20 and a further $10,000 in 2020-21.

Before accessing your super early:

1. Check if you are eligible

In order to access your super, you must satisfy one or more of the following criteria set out by the government:

you lost your job and are unemployed

you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance

on or after 1 January 2020, either

you were made redundant

your working hours were reduced by 20% or more

If you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more

If you meet the requirements, you can simply apply online at mygov. Applications are open till 31 June 2020.

If you are an eligible temporary resident and have lived in Australia for at least one year, you can participate in the first round.

For Australian residents wishing to obtain the latter $10,000, the second round of applications will be open between 1st July to 24th September 2020.

2. Look into all the options

Before accessing super, it is important that you know all your options.

If you are a temporary resident and are facing financial difficulties, this might be a quick way to get cash early.

For Australian citizens, it might be better to consider other financial support available from the Government.

JobSeeker Payment – income support payments of $550 provided

Economic supplement – two automatic $750 payments

JobKeeper Payment – $1,500 a fortnight for 6 months may be available to employers to keep paying eligible employees whose hours have been cut

You can also reach out to your bank or lender for changes in your loan repayments or request a hardship variation.

3. Know the impact on your future savings or retirement

Before withdrawing, remember that your super is set up as your retirement savings.

If you’re a temporary resident, you must take into account your long-term residency status in Australia. If you are here for the short run and may leave Australia, accessing your superannuation early is something to consider. However, if you wish to remain in Australia, it might be preferable to avoid accessing your super early.

For Australian residents, it is important to remember that the money you access today means you are taking it from your future. Your super is managed by your fund and they invest it on behalf of you. With good investments and potential interest gains, your money grows over time and has a value higher than your current weekly contributions. For example, if you are 25 years old now (plan to retire at 67) and want to take out $10,000 early – that could be a $24,000 reduction to your super balance at retirement. Many experts have warned against withdrawals and recommended to access super early only as a last resort (Guardian, 23rd April).

Prior to making any decision regarding your super, you should always consider seeking advice from a professional financial advisor. For more information on the COVID-19 pandemic and other questions, you can check out our resource centre here.

About upcover

At upcover, we are committed to improving the safety of riders by providing support, resources and financial products to help them at work, at home and in between. upcover bridges the protection gap for the fastest growing workforce in Australia by providing the self-employed and independent contractors with the insurance protection and benefits they need.

Disclaimer: This information is general in nature only and does not constitute personal financial advice. It has been prepared without taking into account your personal objectives, financial situation or needs.

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upcover does not currently offer any insurance products, but we are an authorised representative (ARN: 001281671) of an ASIC regulated underwriter (Agile Underwriting Services Pty Ltd ABN 48 607 908 243, AFSL 483374), who will be issuing the insurance products associated with upcover. Once we launch our first insurance product, you’ll be able to find the Product Disclosure Statement (PDS) on our website. You should always consider the PDS in deciding whether to acquire any insurance product.